Summary
Anand Rathi Share and Stock Brokers Limited - Q3 FY26 Earnings Call Summary Thursday, January 15, 2026 4:00 PM
Event Participants
Executives 3 Mr. Pradeep Gupta (Chairman and MD), Mr. Roop Kishor Bhootra (Whole-Time Director), Mr. Tarak Shah (CFO)
Analysts 5 Aman Dugar (Nuvama Wealth), Arka Bhattacharjee (Finedge Analytics), Arup Dey (Individual Investor), Jainam (Jayan Wealth), Sucrit Patil (Eyesight Fintrade)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Assets Under Custody | ₹1,05,800 crores | +48% YoY; driven by strong client additions and market participation. |
| Total Assets Under Management (AUM) | ₹8,368.8 crores | +32.1% YoY and +8% QoQ; reflects consistent growth in Mutual Funds, PMS, and AIF. |
| MTF Book Size | ₹1,231.7 crores | +46.1% YoY and +13.6% QoQ; zero NPAs maintained on the book. |
| Consolidated Revenue | ₹248.2 crores | +21.5% YoY; growth supported by diversified revenue streams. |
| EBITDA | ₹101.2 crores | +31.5% YoY; reported healthy margin of 41%. |
| Profit After Tax (PAT) | ₹37.0 crores | +71.8% YoY; PAT margin stood at 14.9%, up 433 bps sequentially. |
| Broking Revenue | ₹128.7 crores | 52% of total revenue; split 50:50 between Equity Cash and F&O/Others. |
| MTF Interest Income | ₹43.8 crores | +45.7% YoY; surging due to robust book growth and leverage demand. |
| Debt-to-Equity Ratio | 0.59x | Significant reduction from 2.36x YoY; aided by IPO proceeds and debt repayment. |
| Active Clients | 1,58,601 | Count for Q3; 55% of clients have been with the firm for over 3 years. |
Geographic & Segment Commentary
- Broking & Related Services: This remains the core driver contributing 52% of quarterly revenue. Management noted that 96.8% of active clients traded in the Equity Cash segment, and the firm’s cash market volumes grew 11% QoQ vs. 3% for the exchange.
- Distribution & MTF (Non-Broking): This segment contributes 28% of revenue, with a strategic goal to reach a 50:50 mix with broking by March 2027. Distribution income grew 38% YoY, while MTF interest income rose 46% YoY.
- Geographic Reach: The firm operates in 353 cities through 97 own branches and 1,243 business partners. 71% of total active clients are sourced from Tier-2 and Tier-3 cities, with 5 new branches opened recently in North India.
Company-Specific & Strategic Commentary
- Phygital Model & AI: The company is integrating AI tools to analyze RM-client interactions and improve productivity while maintaining a digital execution platform. Digital self-execution now accounts for 40% of total broking revenue.
- Insurance Expansion: Following the acquisition of a corporate agency license, the firm has appointed senior leadership to scale the insurance business, expecting material revenue from Q4 FY26.
- Client Demographics: 80% of active clients are aged 30+, a demographic with higher investable corpus and maturity, leading to better retention (55% staying 3+ years).
- Annuity Income Focus: Strategy focuses on increasing share of trail/annuity income from distribution services to insulate the business from market volatility.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| MTF Book Size | ₹1,500 crores by March 2026 | Management targets continued aggressive growth in the leverage book. |
| Distribution AUM | ₹9,500 - ₹10,000 crores by March 2026 | Expected growth through increased penetration and recovery in market valuations. |
| Revenue Mix | 50% Broking : 50% Non-Broking by March 2027 | Strategic shift to reduce reliance on volatile transaction-based brokerage income. |
Risks & Constraints
| Risk | Context |
|---|---|
| Market Volatility | Adverse market movements impact trail-based distribution revenue and transaction volumes. Management is mitigating this by shifting toward an annuity-heavy revenue model. |
| Regulatory Changes | Increased compliance and regulatory requirements in the broking and insurance sectors. The firm manages this through automated processes and a dedicated compliance team. |
| Competitive Pressure | Rising competition in retail broking impacts margins. The firm focuses on a “phygital” high-touch model for the 30+ age bracket to maintain pricing power. |
Q&A Highlights
Business Model & AI
- Question: How is the firm positioning for the next wave of investor demand and AI? (Sucrit Patil)
- Answer: The firm uses a phygital model focusing on long-term relationships for clients aged 30+. AI is being used both for digital delivery and to analyze interactions between RMs and clients to improve service quality (Pradeep Gupta).
Revenue & Margins
- Question: How will you maintain margins despite industry headwinds? (Arka Bhattacharjee)
- Answer: Growth will be maintained by increasing market share in the cash segment and expanding the high-margin MTF book. The 50:50 revenue mix target for FY27 will provide earnings stability (Pradeep Gupta / Roop Bhootra).
Capital Allocation
- Question: What is the plan for the ₹3,000 crore bank balance? (Arup Dey)
- Answer: This balance primarily consists of fixed deposits kept with exchanges as margin (own and client funds). It cannot be reallocated to MTF; MTF is funded via equity and specific borrowings (Roop Bhootra).
Insurance & Distribution
- Question: Is the distribution decline sequential and have you started earning insurance commission? (Aman Dugar)
- Answer: Sequential distribution revenue was hit by subdued market valuations affecting trail fees. Insurance revenue has started but was miniscule in Q3; Q4 is expected to be the first significant quarter for this stream (Pradeep Gupta).
Key Takeaway
Anand Rathi Share and Stock Brokers delivered a robust Q3 FY26, characterized by a 72% YoY increase in PAT and 21% growth in revenue despite lackluster broader market performance. The company successfully grew its MTF book to ₹1,232 crores (+46% YoY) and its distribution AUM to ₹8,369 crores (+32% YoY). Strategically, the firm is pivoting toward an annuity-based revenue model, aiming for a 50:50 split between broking and non-broking businesses by FY27 to insulate against market volatility. Management remains focused on the “phygital” approach, leveraging technology for 40% of self-executed trades while expanding its physical footprint in Tier-2 and Tier-3 cities. With a significantly deleveraged balance sheet (Debt/Equity at 0.59x), the company is well-positioned to reach its target MTF book of ₹1,500 crores and AUM of ₹10,000 crores by the end of the fiscal year.
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